Latest report reveals the home loan affordability situation across New Zealand
Housing affordability is at its best-ever levels in Christchurch since 2004, according to the latest interest.co.nz Home Loan Affordability Report.
Interest.co.nz said first-home buyers (FHBs) who want to live in one of the major centres should consider Christchurch as an option. The Real Estate Institute of New Zealand's (REINZ) lower quartile selling price for the city dropped to $345,000 in June, the lowest it has been since July 2016. The mortgage payments on a home purchased at $345,000 would take up just 20.2% of the take-home pay of typical FHBs in the city.
The report suggests the majority of the Auckland region is now considered affordable for typical FHBs. In Auckland South, Papakura and Franklin, the mortgage payments on a lower quartile-priced home are less than 40% of the take-home pay of typical FHB couples.
In Auckland South, the improvement in affordability was driven by a combination of the decline in the REINZ lower quartile selling price and a modest fall in the average two-year fixed mortgage interest rate.
In Papakura, the mortgage payments on a lower quartile-priced home would take up 36.5% of a typical FHBs’ take-home pay, and in Franklin, it would be 36.8%.
The report also shows North Shore is still the least affordable place in New Zealand for FHBs. It has a lower quartile price of $795,000 in June, which means the mortgage payments would be likely to eat up 52.5% of typical FHBs’ take-home pay. In Rodney, it would be 48.8%; in west Auckland, it would be 44.1%; and in central Auckland, it would be 41.2%.
Outside Auckland, the only place considered unaffordable for typical first home buyers is Queenstown, where June's lower quartile price of $690,000 made it the third most unaffordable place for FHBs in the country. In Tauranga, the mortgage payments on a lower quartile-priced home would take up 34.8% of a typical FHB couple’s take-home pay. In Wellington City, it would be 31.3%, both well below the 40% threshold.
The report also reveals Whanganui and Invercargill as the most affordable urban centres for FHBs, with lower quartile prices of $167,000 and $169,000 respectively. This means typical FHBs in both cities would probably only need to set aside about 11% of their net pay each week to service the mortgage on a lower quartile-priced home.
